This
is the amended and restated Avaya Inc. Long Term
Incentive Plan for Management Employees (the “Prior Plan”), which, among other
things, has been amended and restated to include provisions relating to Awards
to Non-Employee Directors. Pursuant to the terms of this document, this amended
and restated plan shall be called the Avaya Inc. 2004
Long Term Incentive Plan.

The
purpose of this Plan is to enhance shareholder value by reinforcing the
Company’s efforts to motivate Employees to contribute to the Company’s growth
and performance and enabling the Company to attract and retain individuals of
exceptional managerial talent upon whom, in large measure, the sustained
progress, growth and profitability of the Company depend. In addition, the Plan
is designed to attract and retain qualified persons to serve as directors, to
enhance the equity interest of directors in the Company, and to solidify the
common interests of its directors and shareholders in enhancing the value of
the Company’s common stock. The Plan seeks to encourage the highest level of
director performance by providing directors with a proprietary interest in the
Company’s performance and progress.

Article
2 — Definitions

For
the purposes of this Plan, the following words shall have the meanings ascribed
to them below:

(a)
Affiliate

Any (i) Person
that directly or through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Company or (ii) entity in
which the Company has a significant equity interest, as determined by the
Committee.

(b) Annual Meeting

The Company’s annual, general meeting of
shareholders.

(c) Annual Term

Each twelve calendar-month period beginning
on March 1, 2004 and each March 1 thereafter.

other right, interest, or option relating to Shares or
other securities of the Company granted pursuant to the provisions of the
Plan.

(e) Award
Agreement

The written agreement, contract or other
instrument or document provided by the Company to evidence an Award and
signed by both the Company and the Participant, or such other documentation
in such form as the Committee may from time to time approve.

(f) Board

The Board of Directors of the Company.

(g) Business Day

Any day on which the New York Stock
Exchange is open for transaction of business.

(h) Change in
Control

The happening of any of the following
events:

(i) An acquisition by any individual, entity or group
(within the meaning of Section 13 (d)(3) or 14 (d)(2) of the Exchange Act)
(an “Entity”) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 50% or more of either (A) the then
outstanding shares of common stock of the Company (the “Outstanding Company
Common Stock”) or (B) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election
of directors (the “Outstanding Company Voting Securities”); excluding,
however, the following: (1) any acquisition directly from the Company, other
than an acquisition by virtue of the exercise of a conversion privilege
unless the security so being converted was itself acquired directly from the
Company, (2) any acquisition by the Company, (3) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company, or (4) any acquisition
by any corporation pursuant to a transaction which complies with clauses (A),
(B) and (C) of subsection (iii) of this Article 2(g); or

(ii) A change
in the composition of the Board such that the individuals who, as of the
Effective Date, constitute the Board (such Board shall be hereinafter referred
to as the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board; provided, however, that for purposes of
this definition, any individual who becomes a member of the Board subsequent
to the Effective Date, whose election, or nomination for election by the
Company’s stockholders, was approved by a vote of at least a majority of
those individuals who are members of the Board and who were also members of
the Incumbent Board (or deemed to be such pursuant to this proviso) shall

be considered
as though such individual were a member of the Incumbent Board; and provided,
furtherhowever, that any such individual whose initial
assumption of office occurs as a result of or in connection with either an
actual or threatened election contest (as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of an Entity
other than the Board shall not be so considered as a member of the Incumbent
Board; or

(iii) The
approval by the stockholders of the Company of a merger, reorganization or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company (each, a “Corporate Transaction”) or, if consummation
of such Corporate Transaction is subject, at the time of such approval by
stockholders, to the consent of any government or governmental agency, the
obtaining of such consent (either explicitly or implicitly by consummation);
excluding however, such a Corporate Transaction pursuant to which (A) all or
substantially all of the individuals and entities who are beneficial owners,
respectively, of the Outstanding Company Stock and Outstanding Company Voting
Securities immediately prior to such Corporate Transaction will beneficially
own, directly or indirectly, more than 60% of, respectively, the outstanding
shares of common stock, and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Corporate Transaction
(including, without limitation, a corporation or other Person which as a
result of such transaction owns the Company or all or substantially all of
the Company’s assets either directly or through one or more subsidiaries (a
“Parent Company”)) in substantially the same proportions as their ownership,
immediately prior to such Corporate Transaction, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case may be,
(B) no Entity (other than the Company, any employee benefit plan (or related
trust) of the Company, such corporation resulting from such Corporate
Transaction or, if reference was made to equity ownership of any Parent
Company for purposes of determining whether clause (A) above is satisfied in
connection with the applicable Corporate Transaction, such Parent Company)
will beneficially own, directly or indirectly, 50% or more of, respectively,
the outstanding shares of common stock of the corporation resulting from such
Corporate Transaction or the combined voting power of the outstanding voting
securities of such corporation entitled to vote generally in the election of
the directors unless such ownership resulted solely from ownership of
securities of the Company prior to the Corporate Transaction, and (C)
individuals who were members of the Incumbent Board will immediately after
the consummation of the Corporate Transaction constitute at least a majority
of the members of the board of directors of the corporation resulting from
such Corporate Transaction (or, if reference was made to equity ownership of
any Parent Company for purposes of determining whether clause (A) above is satisfied
in connection with the applicable Corporate Transaction, of the Parent
Company); or

(iv) The
approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company.

(i) Code

The Internal Revenue Code of 1986, as
amended.

(j) Committee

The Corporate Governance and Compensation
Committee of the Board, or any successor committee that is comprised of two
or more Directors who meet the criteria for independence as required by any
applicable law and the listing standards of the New York Stock Exchange.

(k) Company

Avaya Inc., a Delaware
corporation.

(l) Company Action

A Company or Subsidiary declared or
initiated (i) termination from service under a
force management program, (ii) sale of a unit or portion of a unit,
(iii) transfer of a Participant to a corporation, partnership, limited
liability company or other business entity in which the Company has a direct
or indirect equity interest and which does not constitute a Subsidiary or
(iv) placement of the job function of a Participant with an outsourcing
contractor unless the successor employer has made appropriate provision for the
assumption and continuation of Awards of Employees who are employed by the
successor employer after an event described in (ii), (iii) or (iv).

(m) Covered Employee

The Chief Executive Officer and all
Vice-Presidents.

(n) Deferral Plan

The Company’s Deferred Compensation Plan,
and any successor or replacement plan then in effect with respect to
Participants.

(o) Delegate

The person or committee authorized by the
Committee or the Board to exercise specified authority under this Plan.

(p) Dividend
Equivalent

Has the meaning assigned in Article 6(b).

(q)
Disability or Disabled

Termination of employment under
circumstances where the Participant qualifies for benefits under a long-term
disability pay plan as provided in the Participant’s Award Agreement.

(r) Discounted
Option

Any Option awarded under Article 7 with an
exercise price that is less than the Fair Market Value of a Share on the date
of the grant.

(s) Effective Date

See Article 21.

(t) Employee

Any employee of the Company or any
Subsidiary, excluding leased employees within the meaning of Section 414(n)
of the Code.

(u) Exchange Act

The Securities Exchange Act of 1934, as
amended.

(v) Exercise Date

See Article 19(c)(v).

(w) Existing Plans

The Prior Plan, the 2000 Long Term
Incentive Plan, the 2000 Stock Compensation Plan for Non-Employee Directors
and the Broad-Based Stock Option Plan.

(x) Expiration
Date

The date specified in the Award Agreement
after which rights under the Award expire.

(y) Fair Market
Value

The average of the high and low sales
prices of a Share as reported on the New York Stock Exchange on the Grant
Date, or if no sales of Shares were reported on such date, the average of the
high and low sales prices of a Share on the next preceding day on which sales
were reported.

(z) Grant Date

The Grant Date shall be the date an Award
is granted as set forth in the Award Agreement.

(aa)

Net Income

The net income of the Company as determined
under generally accepted accounting principles, excluding (a) extraordinary
items (net of applicable taxes); (b) cumulative effects of changes in
accounting principles; (c) gains and losses (net of applicable taxes) from
the sales of securities; and (d) nonrecurring items (net of applicable taxes)
including, but not limited to, gains or losses on asset dispositions and
sales of divisions, business units or subsidiaries, restructuring charges,
gains and losses from qualified benefit plan curtailments and settlements,
and income or expenses related to deferred tax assets.

(bb)

Non-Employee Director

A member of the Board who is not an
Employee of the Company or any of its Affiliates.

(cc)

Option

An Award described in Article 7.

(dd)

Other Stock Unit Award

An Award described in Article 11.

(ee)

Participant

Each (i) Employee
or (ii) Non-Employee Director, who is selected by the Committee to receive an
Award under the Plan

(ff)

Performance Award

An award described in Article 10.

(gg)

Performance Period

That period, established by the Committee
at or after the time any Performance Award is granted, during which any
performance goals specified by the Committee with respect to such Award are
to be measured.

(hh)

Person

Any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, limited
liability company, other entity or government or political subdivision.

(ii)

Plan

The Avaya Inc.
2004 Long Term Incentive Plan (formerly known as the Long Term Incentive Plan
for Management Employees).

(jj)

Restricted Stock

An Award described in Article 9.

(kk)

Retainer

The retainer paid to a Non-Employee
Director as compensation for services as a member of the Board or any
committee of the Board with respect to each Annual Term, but shall not
include any reimbursement for expenses.

(ll)

Retirement

Termination of the employment of an
Employee with the Company or any Subsidiary under circumstances where the
Employee qualifies for benefits under a retirement plan as provided in the
Employee’s Award Agreement.

(mm)

Share

A share of the common stock of the Company,
par value $.01 per share.

(nn)

Stock Appreciation Right

An Award described in Article 8.

(oo)

Stock Award Committee

A committee of one or more directors
appointed by the Committee pursuant to Article 4.

(pp)

Stock Retainer

That portion of a Non-Employee Director’s
Retainer that, pursuant to Article 19(a) of this Plan, such Non-Employee
Director has elected, or is required, to receive in Shares.

(qq)

Subsidiary

A “subsidiary corporation” of the Company
as defined in Section 424(f) of the Code, an entity in which the Company
directly or indirectly owns 50% or more of the voting interests or an entity
in which the Company has a significant equity interest, as determined by the
Committee.

(rr)

Substitute Award

An Award granted in lieu of an Option,
Restricted Stock or Stock Appreciation Right pursuant to Article 17.

(ss)

Term

The period beginning on the date this Plan
is approved by the stockholders of the Company, and ending on October 1,
2013.

Article
3 — Shares Available for Awards; Adjustments

(a)
Subject to adjustment as provided in Article 3(b) and the remainder of
this Article 3(a), the aggregate number of Shares which may be made subject to
Awards granted under this Plan shall not exceed 29,000,000. Any Shares granted
as Options (other than Discounted Options) or Stock Appreciation Rights shall
be counted against this limit as one (1) Share for every one (1) Share granted.
Any Shares granted as Awards other than Options or Stock Appreciation Rights
shall be counted against this limit as one and thirty-five hundredths (1.35)
Share for every one (1) Share granted. For each Discounted Option granted, the
number of full Shares representing the aggregate value of the discount on the
date of grant shall reduce the number of Shares that may be available for the
grant of Awards by one and thirty-five hundredths (1.35) Share for every one
(1) Share granted. If any Shares are subject to an Award, including an award
under any of the Existing Plans that was made prior to and remains outstanding
as of the Effective Date, that is forfeited, settled in cash, expires, or is
otherwise terminated without issuance of Shares, such Shares shall again be
available for Awards under the Plan if no Participant shall have received any
benefits of ownership in respect thereof. In addition, the number of shares
available for Awards under the Plan shall be increased by (i)
that number of Shares which the Company repurchases in the open market or
otherwise with proceeds received from Option exercises, (ii) Shares that are
tendered or withheld to pay the exercise or purchase price of an Award or to
settle tax withholding or other obligations arising in connection with an
Award, and (iii) Shares that are not otherwise issued pursuant to an Award, in
each case including with respect to awards made under any of the Existing Plans
prior to and remaining outstanding as of the Effective Date. In addition, the
number of Shares available for grants under the Plan or to a Participant in any
fiscal year shall not be reduced by Awards granted or Shares issued by the
Company through the assumption of, or in substitution or exchange for awards or
the right or obligation to make future grants of awards in connection with the
acquisition of another corporation or business entity. Any Shares issued under
the Plan may consist, in whole or in part, of authorized and unissued Shares, Shares purchased inthe
open market or otherwise, treasury Shares, or any combination of the foregoing,
as the Board or the Committee may from time to time determine.

(b) In the event of any merger,
reorganization, consolidation, recapitalization, stock dividend, stock split,
reverse stock split, spin-off or similar transaction or other change in
corporate structure affecting the Shares, such adjustments and other
substitutions shall be made to the Plan, and to Awards as the Committee in its
sole discretion deems equitable or appropriate, including, without limitation:
such adjustments in the aggregate number, class and kind of Shares or other
consideration which may be delivered under the Plan, in the aggregate or to any
one Participant; in the number, class, kind and option or exercise price of
Shares subject to outstanding Awards granted under the Plan; and in the number,
class and kind of Shares subject to Awards granted under the Plan (including,
if the Committee deems appropriate, the substitution of similar options to
purchase the shares of, or other awards denominated in the shares of, another
company); provided, however, that the number of Shares or other
securities subject to any Award shall always be a whole number.

(c)
Except as provided in Article 22, the Committee shall be authorized to
make adjustments in Performance Award criteria or in the terms and conditions
of other Awards in recognition of unusual or nonrecurring events affecting the
Company or its financial statements, or changes in applicable laws, regulations
or accounting principles. The Committee may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or any Award in the manner
and to the extent it shall deem desirable. In the event the Company shall
assume outstanding employee benefit awards or the right or obligation to make
future such awards in connection with the acquisition of another corporation or
business entity, the Committee may, in its discretion, make such adjustments in
the terms of Awards under the Plan as it shall deem appropriate.

Article
4 — Administration

The
Plan shall be administered by the Committee. The Committee shall have full
power and authority, subject to such resolutions not inconsistent with the
provisions of the Plan as may from time to time be adopted by the Board, to (i) interpret and administer the Plan and any instrument or
agreement entered into under the Plan; (ii) establish such rules and
regulations and appoint such agents as it shall deem appropriate for the proper
administration and interpretation of the Plan, including a Stock Award
Committee to make grants of Awards and discharge the duties of the Committee;
and (iii) make any other determination and take any other action that the
Committee deems necessary or desirable for administration of the Plan. The
Committee or the Stock Award Committee may appoint a Delegate to administer and
interpret the provisions of the Plan, promulgate rules and regulations under
the Plan, discharge the duties of the Committee under Articles 12 and 17,
designate employees to perform ministerial functions under this Plan and
execute documents on behalf of the Company; provided, however,
that any Delegate appointed pursuant to this Article 4 who is a Participant in
the Plan shall not participate in making any decision that would benefit such
Delegate, except tothe extent such
decision would only incidentally benefit the Delegate and would also generally
benefit a larger class of Participants.

The interpretations and construction of any
provision of the Plan by the Committee, the Stock Award Committee, or the
Delegate, as the case may be, as well as any factual determinations, shall be
final, unless otherwise determined by the Board. No member of the Board, the
Committee, the Stock Award Committee or any Delegate shall be liable for any
action or determination made by him or her in good faith.

Article
5 — Eligibility

The
Committee, in its sole discretion, may grant an Award to (i)
any Employee who is actively employed by the Company or a Subsidiary and (ii)
to any Non-Employee Director. The adoption of this Plan shall not be deemed to
give any Employee or Non-Employee Director any right to be granted an Award,
except and to the extent and upon such terms and conditions as may be
determined by the Committee.

Article
6 – Awards — General

(a)
Awards may be granted to Participants either alone, in tandem with or in
addition to any other type of Award granted under the Plan. Awards may be
granted for no consideration, for such minimum consideration as is required by
applicable law or for such other consideration as the Committee may determine.
Any Award granted under the Plan shall be evidenced by an Award Agreement. The
prospective recipient of any Award shall not, with respect to such Award, be
deemed to have become a Participant, or to have any rights with respect to such
Award, until and unless such recipient has complied with the then applicable
terms and conditions of the related Award Agreement. The term of each Award
shall be for such period of months or years from date of its grant as may be
determined by the Committee; providedthat in no event shall the
term of any Option exceed a period of seven (7) years from its Grant Date. The
Committee may impose such conditions on the exercise or vesting of any Award as
it shall deem appropriate.

(b)
Subject to the provisions of this Plan and any Award Agreement, the
recipient of an Award (including, without limitation, any deferred award) may,
if so determined by the Committee, be entitled to receive, currently or on a
deferred basis, interest or dividends, or interest or dividend equivalents
(collectively, “Dividend Equivalents”), with respect to the number of Shares
covered by the Award, as determined by the Committee, in its sole discretion,
and the Committee may provide that such amounts (if any) shall be deemed to
have been reinvested in additional Shares or otherwise reinvested.

Article
7 — Options

An
Option is a right to purchase Shares subject to the following terms and
conditions and to such additional terms and conditions, not inconsistent with
the provisions of the Plan, as the Committee shall deem desirable; provided,
however, that in no event shall any Option granted under this Plan be an
“incentive stock option” as such term is defined under Section 422 of the Code:

(a)
Option Price. The exercise
price per Share under an Option shall be determined by the Committee in its
sole discretion; provided that such exercise price shall not be less
than 75% of the Fair Market Value of a Share on the date of the grant.

(b)
Exercisability. Options shall be exercisable at such time or times as
determined by the Committee at or subsequent to grant.

(c)
Method Of Exercise. Subject to the other provisions of the Plan and any
applicable Award Agreement, any Option may be exercised by the Participant in
whole or in part at such time or times, and the Participant may make payment of
the option price in such form or forms, including, without limitation, payment
by delivery of cash or Shares (whether through actual delivery or attestation
of sufficient ownership) or by any combination of cash or Shares. Subject to
the other provisions of the Plan and any applicable Award Agreement, if
permitted by the Committee, applicable accounting rules and applicable law, the
Company may withhold Shares as payment of the exercise price for any Option.

(d)
Form Of Settlement. In its sole discretion, the Committee may provide, at
the time of grant, that the Shares to be issued upon an Option’s exercise shall
be in the form of Restricted Stock or other similar securities, or may reserve
the right so to provide after the time of grant.

(e)
Repricing. Any repricing (as such term is defined under
the listing standards of the New York Stock Exchange) of Options that are
granted pursuant to the terms of this Plan shall be subject to the approval of
the Company’s shareholders.

Article
8 — Stock Appreciation Rights

A
Stock Appreciation Right is a right to receive in cash the difference between
the Fair Market Value of a Share on the exercise date and the Grant Date. Stock
Appreciation Rights may be granted alone (“freestanding”) or may be related to
an Option or other Award. A freestanding Stock Appreciation Right shall
otherwise have the same terms and conditions as an Option. Any Stock
Appreciation Right related to an Option may be granted at the same time such
Option is granted or at any time thereafter before exercise or expiration of
such Option. In the case of any Stock Appreciation Right related to any Option,
the Stock Appreciation Right or applicable portion thereof shall terminate and
no longer be exercisable upon the termination or exercise of the related
Option, except that a Stock Appreciation Right granted with respect to less
than the full number of Shares covered by a related Option shall not be reduced
until the exercise or termination of the related Option exceeds the number of
Shares not covered by the Stock Appreciation Right. Any Option related to any
Stock Appreciation Right shall no longer be exercisable to the extent the
related Stock Appreciation Right has been exercised.

Article
9 — Restricted Stock

Restricted
Stock is an Award in the form of Shares issued with the restriction that the
Participant may not sell, transfer, pledge or assign the Shares and with any
other restrictions that the Committee may impose (including restrictions on the
right to vote or receive cash dividends on the Shares) which restrictions may
lapse separately or in combination at such time or times, in installments or
otherwise, as the Committee shall determine.

Article
10 — Performance Awards

A
Performance Award is an Award of Performance Units or Performance Shares which
vests and becomes non-forfeitable based on performance criteria determined by
the Committee to be achieved over a prescribed Performance Period. An Award of
Performance Shares is a number of units valued by reference to a designated
number of Shares, and an Award of Performance Units is a number of units valued
by reference to a designated amount of property other than Shares. The
performance criteria to be achieved during any Performance Period and the
length of the Performance Period shall be determined by the Committee upon the
grant of each Performance Award. Except as provided in Articles 12 and 14,
Performance Awards will be distributed only after the end of the relevant
Performance Period. A Performance Period shall not be less than twelve months
nor greater than five years.

Performance
Awards may be paid in cash, Shares, other property or any combination of the
foregoing, in the sole discretion of the Committee upon the grant of the
Performance Award. The performance levels which have been achieved for each
Performance Period and the amount of the Award to be distributed shall be
conclusively determined by the Committee. Performance Awards may be paid in a
lump sum or in installments following the close of the Performance Period.

Article
11 – Other Stock Unit Awards

Other
Awards of Shares and other Awards that are valued in whole or in part by
reference to, or are otherwise based on, Shares (“Other Stock Unit Awards”) may
be paid in Shares, other securities of the Company, cash or any other form of
property as the Committee shall determine upon the grant of the Other Stock
Unit Award. Other Stock Unit Awards may be issued with such restrictions that
the Committee may impose, which restrictions may lapse separately or in
combination at such time or times, in installments or otherwise, as the
Committee shall determine. Shares purchased pursuant to Other Stock Unit Awards
shall be purchased for such consideration as the Committee shall in its sole
discretion determine, which shall not be less than the
Fair Market Value of such Shares as of the Grant Date of such Award.

Article
12 — Termination of Employment

Except
as otherwise provided in Article 19 or in an Award Agreement, the provisions of
this Article 12 shall govern the rights of Participants to exercise Options
following termination of employment.
If a Participant terminates employment for any reason other than Retirement,
Disability or death (i) any portion of the
Participant’s Options which are exercisable on the date employment terminates
may be exercised until the earlier of ninety days following termination of
employment or the original Expiration Date of the Option, and (ii) any portion
of an Option that is not exercisable on the date employment terminates shall be
forfeited and canceled, except that if the reason for the termination of
employment is a Company Action, then the Option shall become immediately
exercisable for the period specified in clause (i)
with respect to the number of Shares determined by the following formula, and
shall be forfeited and canceled with respect to the remaining Shares:

Shares

Original Shares

Number of Completed Months Prior to

Exercisable

=

Granted

X

Termination of Employment Since Granted

Number of Complete Months from Grant Date

to Full Exercisability of
Option

Minus: Number of Shares Exercisable Prior to

Termination of Employment

Upon
termination of employment by reason of Retirement or Disability, any portion of
a Participant’s Option that is then outstanding shall, to the extent not then
exercisable, be immediately forfeited and canceled in its entirety. To the
extent that an Option is exercisable on the date of a Participant’s Retirement
or Disability, the Option will remain exercisable until the original Expiration
Date of the Option. Notwithstanding the foregoing, if a Participant terminates
employment pursuant to a Company Action under circumstances that also
constitute Retirement for such Participant, then any portion of any Option of
the Participant which becomes exercisable by reason of this Article 12 along
with any portion of any Option of the Participant which is exercisable on the
date of termination of employment shall be exercisable, until the original
Expiration Date of the relevant Option. Upon the death of a Participant, the
outstanding portion of such Participant’s Option shall, to the extent not then
exercisable, become immediately exercisable in full and the Option shall remain
exercisable until the original Expiration Date of the Option. The Committee or
its Delegate may, in its sole discretion, waive or modify the application of
this Article 12 in the case of any individual Participant. This Article 12
applies only to Options; however the Committee may provide for similar
treatment of other forms of Awards at the time that the Award is granted.

Article
13 — Nonassignability/Deferral

(i) No Award shall be assigned or transferred by a
Participant who is an Employee other than by will or the laws of descent and
distribution, and during the lifetime of the Participant may be exercised only
by such Participant or his or her guardian or legal representative; provided,
however, that an Option granted under the Plan to an Employee may be assigned
or transferred to the extent determined by the Committee and set forth in the
applicable Award Agreement.

(iii)
To the extent permitted by the Deferral Plan, a Participant may elect to have
all or a portion of any Award deliverable under this Plan credited to the
deferred compensation account of such Participant under the Deferral Plan to be
held in, respectively, the Company Shares and cash portions of such account.

Article
14 — Change in Control Provisions

Notwithstanding
any other provision of the plan to the contrary, but, with respect to
Non-Employee Directors, subject to Article 19, unless the Committee shall
determine otherwise at the time of grant with respect to a particular Award, in
the event of a Change in Control any Options and Stock Appreciation Rights
outstanding as of the date such Change in Control is determined to have
occurred, and which are not then exercisable and vested, shall become fully
exercisable and vested to the full extent of the original grant and any
Restricted Stock and Other Stock Unit Awards which are not then vested shall
become vested and non-forfeitable to the full extent of the original grant. If
a Change in Control occurs or is to occur during a Performance Period, the Committee
shall determine the extent to which Performance Awards shall vest or shall be
adjusted in accordance with Article 3(c) in the event of a Change in Control.
This determination shall be made by individuals who are members of the
Incumbent Board, as defined in the definition of Change in Control in Article
1(h).

Article
15 — Reservation of Shares

The
Company, during the term of this Plan, will at all times reserve and keep
available, and will seek or obtain from any regulatory body having jurisdiction
any requisite authority necessary to issue and to sell, the number of Shares
that shall be sufficient to satisfy the requirements of this Plan. The
inability of the Company to obtain from any regulatory body having jurisdiction
the authority deemed necessary by counsel for the Company for the lawful
issuance and sale of Shares shall relieve the Company of any liability in
respect of the failure to issue or sell Shares as to which the requisite
authority has not been obtained.

Article
16 — Taxes

Where
permitted by the Committee and set forth in the applicable Award Agreement, a
Participant may request that the Company satisfy any applicable taxes in
connection with an Award by withholding from payment to the Participant Shares
(at minimum statutory rates only), or the Participant may deliver Shares
(whether through actual delivery or attestation of sufficient ownership) to the
Company to satisfy those obligations, In addition, the Company and any
Subsidiary shall have the right to condition the grant or exercise of any Award
on a Participant’s payment of any applicable amounts required by a governmental
agency to be withheld from payment to the Participant or paid or deducted by
the Company or a Subsidiary in connection with an Award (“withholding tax”). The
Company and any Subsidiary shall also have the right to deduct any withholding
tax from a Participant’s other compensation or to make any other arrangements
to satisfy withholding tax obligations, including arrangements with one or more
brokerage firms pursuant to cashless exercise procedures. The Company and any
Subsidiary shall further have the right to deduct from any payment under an
Award under the Plan or from a Participant’s other compensation any tax or
social insurance payment imposed on the Company or Subsidiary in connection
with such Award.

Article
17 — Employees Based Outside of the United States

Notwithstanding
any provision of the Plan to the contrary, in order to foster and promote
achievement of the purposes of the Plan or to comply with the provisions of
laws in other countries in which the Company and its Subsidiaries operate or
have Employees, the Committee or its Delegate, in its sole discretion, shall
have the power and authority to (1) determine which Employees that are subject
to the tax, employment and securities laws of nations other than the United
States are eligible to participate in the Plan, (2) modify the terms and
conditions of any Awards granted to such Employees (including the grant of
Restricted Stock, Stock Appreciation Rights or some other comparable form of
award (“Substitute Award”) in lieu of Options), and (3) establish subplans, modified Option exercise procedures and other
terms and procedures to the extent such actions may be necessary or advisable;
provided, however, that the Committee may not grant such Awards that do
not comply with the limitations of Article 3. Any subplans
established under this Article 17 shall be attached to this Plan as Appendices.
The terms of this Plan applicable to Options shall apply with like effect to
Stock Appreciation Rights, Restricted Stock Awards, Performance Awards, Other
Stock Unit Awards and Substitute Awards to the extent legally permissible.

Article
18 — Rights to Continued Employment or Directorship

Neither
this Plan nor any Award shall be construed as giving any person the right to be
retained in the employ of the Company or any Subsidiary. No Participant shall
have any claim to be granted any Award under the Plan or to include any Award
or its value in any form of severance or similar pay, or in any benefit plan or
program which by its terms does not specifically include the value of the
Award. There is no obligation of uniformity of treatment of Participants under
the Plan. This Plan is of limited duration and creates no ongoing obligation of
the Company to provide any future benefit of similar nature or value. Nothing
in the Plan shall be deemed to create any obligation on the part of the Board
or the Company to nominate any Director forreelection
by the Company’s shareholders or to limit the rights of the shareholders to
remove any Director.

Article 19 – Non-Employee Director Awards

Notwithstanding
any provision in the Plan to the contrary, the following terms shall apply with
respect to Awards granted to Non-Employee Directors under the Plan:

(a)
Inaugural Grants

Non-employee
Directors may receive such inaugural grants of Awards in the form of Shares,
Restricted Stock or Options upon commencement of service on the Board as the
Committee shall determine.

(b)
Retainer.

(i)

Commencing with the Annual Term beginning
March 1, 2004, each Participant will receive fifty percent (50%) of his or
her Retainer for each Annual Term in the form of a Stock Retainer, Restricted
Stock or Option, as determined by the Committee, and may elect to receive all
or any portion of the remaining fifty percent (50%) of such Retainer in the
form of either a Stock Retainer or in cash; provided, that, to the extent deemed
permissible by the Committee, each Non-Employee Director may elect to receive
in lieu of any or all of any amount to be paid as a Stock Retainer a payment
in the form of an Option for the number of Shares determined pursuant to
Article 19(c). Any such election shall be filed on a form prescribed by the
Committee for this purpose and such election (or failure to elect) shall be
irrevocable as of the last date by which such election was due to be filed
with the Company.

(ii)

If any Non-Employee Director fails to
notify the Secretary of the Company in writing by December 31 of the
preceding Annual Term of the desired form of payment of the Retainer for the
next Annual Term, then such Participant shall be deemed to have elected a Stock
Retainer for fifty percent (50%) of the value of such Retainer, with the
remaining 50% in cash.

(iii)

Any Shares constituting a Stock Retainer
shall be payable automatically on March 1 of each Annual Term (or, if March 1
is not a Business Day, on the next succeeding Business Day), commencing March
1, 2004. Payments for the cash portion, if any, of the Annual Retainer shall
be made on the same day. A Participant’s Stock Retainer shall consist of the
largest number of whole Shares having a Fair Market Value, as of the date of
payment, equal to the portion of the Retainer to be paid in Shares. The Fair
Market Value of any fractional share shall be paid in cash.

(iv)

This Article 19 shall apply to any person
who becomes a Non-Employee Director Participant other than at the beginning
of an Annual Term (or the immediately preceding Annual Meeting) with respect
to the Retainer determined by the Committee to be payable for such portion of
such Annual Term which follows his or her appointment to the Board. Such
person shall make the election prescribed by Article 19(b)(i) no later than the 30th day following the effective
date of his or her appointment to the Board. The payment date for any cash
portion of the Retainer and the date of grant for any Option or Stock
Retainer shall be the first Business Day which occurs at least fifteen (15)
calendar days after receipt by the Company of such election.

(c) Options.

(i)

In the event that the Committee determines
that a Non-Employee Director may elect to receive payment of all or any
portion of the Retainer in the form of an Option, an Option shall be granted,
on the terms and conditions described in this Plan, to purchase the largest
number of whole Shares obtained by applying the following formula:

Number of
Shares =

Multiplier X

Dollar Amount of Retainer to be paid as an Option
Fair Market Value of a Share on March 1*

*or, if March 1 is not a Business Day, on
the next succeeding Business Day.

“Multiplier” shall be a number (but need
not be a whole number) to be determined by the Committee in its discretion in
order to provide that any grant to a Director is equitable under the
circumstances, including without limitation, prior grants awarded to such
Director and grants awarded to other Directors; provided, however, that the
Multiplier shall not be less than 1 nor greater than 5.

The value of any fractional share shall be
paid in cash.

(ii)

Options shall be subject to the terms and
conditions set forth in this Plan and to such additional terms and
conditions, not inconsistent with the provisions of this Plan, as the
Committee shall deem desirable.

(iii)

The exercise price per Share under an
Option shall be the Fair Market Value of a Share on the date of grant,
subject to adjustment as prescribed in Article 3(b).

(iv)

Options shall be vested and non-forfeitable
on the Grant Date and be fully exercisable on the earliest of (i) the date which is six (6) months after the Grant

Date, (ii) the occurrence of a Change in
Control and (iii) the death of a Participant (any of the foregoing the
“Exercise Date”).

(v)

Except as provided in this Article 19(c)(v) or as otherwise determined by the Committee and set
forth in the applicable Award Agreement, an Option is not transferable other
than by will or the laws of descent and distribution, and during the lifetime
of the Non-Employee Director, may be exercise only by such Non-Employee
Director or his or her guardian or legal representative. Notwithstanding the
foregoing, an Award may be transferred by the Non-Employee Director, in
accordance with rules established by the Company, to one or more members of
the Non-Employee Director’s immediate family, to a partnership of which the
only partners are members of such immediate family or to a trust established
by the Non-Employee Director for the benefit of one or more members of such
immediate family (each such transferee a “Permitted Transferee”). For purposes
of this Article 19, “immediate family” means a Non-Employee Director’s
spouse, parents, children, grandchildren and spouses of children and
grandchildren (including adopted children and grandchildren, as the case may
be). A Permitted Transferee may not further transfer the Award. An Award
transferred pursuant to this Article 19 shall remain subject to all of the
provisions of the Plan and any Award Agreement with respect to such Award and
may not be exercised by a Permitted Transferee unless and until all legal or
regulatory approvals, listings, registrations, qualifications or other
clearances as determined by the Company to be required or appropriate have
been obtained.

(vi)

A Non-Employee Director may, in accordance
with procedures established by the Company, designate one or more
beneficiaries to receive all of his or her rights to any unexercised Award
and may change or revoke such designation at any time. In the event of the
death of the Non-Employee Director, any Award or portion thereof which is
subject to such a designation shall be exercisable (to the extent such
designation is determined by the Company to be valid, effective and
enforceable) by the designated person or persons in accordance with this Plan
and any Award Agreement. Such determination by the Company shall be final and
binding on all Persons, and the Company shall have no liability with respect
to any Person with respect to such determination.

(vii)

Any Option may be exercised by the
Participant in whole or in part at any time on or after the Exercise Date and
before the expiration of such Option. The Participant shall make payment of
the Option price in cash or in Shares (whether through actual delivery or
attestation of sufficient ownership) with a Fair Market Value equivalent to
the exercise price for all of the Shares to be purchased upon exercise of the
Option. Subject to the other provisions of the Plan and any applicable Award
Agreement, if permitted by the Committee, applicable accounting rules and
applicable law, the Company may withhold Shares as payment of the exercise
price for any Option.

Article
20 — Amendment of Plan

The
Board may amend the Plan at any time and from time to time. The Board may, at
any time or from time to time, suspend or terminate this Plan in whole or in
part.

No
such amendment, suspension or termination of the Plan may, however, impair any
Award granted prior to such amendment, suspension or termination, without the
written consent of the affected Participant.

Shareholder
approval of amendments to the Plan will be obtained where required to comply
with applicable law and New York Stock Exchange regulations.

Article
21 — Term of Plan

The
Plan shall become effective upon approval of the Plan by the stockholders of
the Company (the “Effective Date”).

The
Plan shall terminate on October 1, 2013 or at such earlier date as may be
determined by the Board of Directors. Termination of the Plan, however, shall not
affect the rights of Participants under Awards previously granted to them, and
all unexpired Awards shall continue in force and operation after termination of
the Plan except as they may lapse or be terminated pursuant to this Plan.

Article
22 — Code Section 162(m) Provisions

(a)
Notwithstanding any other provision of this Plan, if the Committee determines
at the time Restricted Stock, a Performance Award or an Other Stock Unit Award
is granted to a Participant that such Participant is, or may be as of the end
of the tax year for which the Company would claim a tax deduction in connection
with such Award, a Covered Employee, then the Committee may provide that this
Article 22 is applicable to such Award under such terms as the Committee shall
determine. Notwithstanding any provision of the Plan other thanArticle
3(b), no Participant may receive, in any 36-month period during the Term
beginning withthe Effective Date, Awards with respect to more than, in
each case in the aggregate, (i)1,500,000
Shares, (ii) $15 million in cash, other securities of the Company or other
forms ofproperty, or (iii) Options or Stock Appreciation Rights on more
than 5,000,000 Shares.

(b)
If an Award, other than an Option or Stock Appreciation Right with an exercise
price not less than 100% of the Fair Market Value of a Share on the date of
grant, is subject to this Article 22, then the grant of cash, Shares or other
property shall be subject to the Company attaining specified levels of one or
any combination of the following for the Performance Period: NetIncome; net cash provided by operating activities;
earnings per Share from continuing operations; operating income; revenues;
gross margin; return on operating assets; return on equity; economic value
added; stock price appreciation; total shareholder return (measured in terms of
stock price appreciation and dividend growth); or cost control, of the Company
or the Subsidiary or division of the Company for or within which the Covered
Employee is primarily employed (collectively, the “Performance Goals”). The
Committee shall establish the Performance Goals within 90 days following the
date of commencement of the applicable Performance Period, or by such earlier
time as is prescribed by Section 162(m) of the Code or the regulations thereunder in order for the level to be considered
“pre-established.” The Committee, may, in its discretion, reduce the amount of
any Award subject to this Article 22 based on such criteria as it shall
determine, including but not limited to individual merit.

(c) Notwithstanding any contrary provision of
the Plan other than Article 14, the Committee may not adjust upwards the amount
payable pursuant to any Award subject to this Article 22, nor may it waive the
achievement of the applicable Performance Goal contained in Article 22(b),
except in the case of the death or disability of a Participant.

(d)
Prior to the payment of any Award subject to this Article 22, the Committee
shall certify in writing that the applicable Performance Goal applicable to
such Award was met.

(e)
The Committee shall have the power to impose such other restrictions on Awards
subject to this Article 22 as it may deem necessary or appropriate to ensure
that such Awards satisfy all requirements for “performance-based compensation”
within the meaning of Section 162(m)(4)(C) of the Code, the regulations
promulgated thereunder, and any successors thereto.

Article
23 — Form of Shares and Restricted Stock Awards

Shares
issued or delivered under the Plan and any Restricted Stock Award may be
evidenced in such manner as the Committee in its sole discretion shall deem
appropriate, including, without limitation, book-entry registration or issuance
of a stock certificate or certificates. In the event any stock certificate is
issued in respect of a Restricted Stock Award, such certificate shall be
registered in the name of the Participant, and shall bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to such Award.
All shares delivered under the Plan shall be subject to such stop-transfer
orders and other restrictions as the Company may deem advisable under the
rules, regulations, and other requirements of the Securities and Exchange
Commission, any stock exchange upon which the Shares are then listed, and any
applicable Federal or state securities law, and the Company may cause a legend
or legends to be put on any such certificates to make appropriate reference to
such restrictions.

Article
24 — Postponement of Issuance and Delivery

The
issuance or delivery of any Shares under this Plan may be postponed by the
Company for such period as may be required to comply with any applicable
requirements under Federal securities laws, any applicable listing requirements
of any national securities exchange, and requirements under any other law or
regulation applicable to the issuance or delivery of such Shares, and the
Company shall not be obligated to issue or deliver any Shares if the issuance
or delivery of such Shares shall constitute a violation of any provision of any
law or of any regulation of any governmental authority or any national
securities exchange.

Article 25 — Severability

If
any provision of this Plan is or becomes or is deemed invalid, illegal or
unenforceable in any jurisdiction, or would disqualify the Plan or any Award
under any law deemed applicable by the Company, such provision shall be
construed or deemed amended to conform to applicable laws or if it cannot be
construed or deemed amended without, in the determination of the Company,
materially altering the intent of the Plan, it shall be stricken and the
remainder of the Plan shall remain in full force and effect.

Article
26 — Governing Law

The
Plan and the validity and construction of any Awards granted hereunder shall be
governed by the laws of the State of Delaware
without regard to principles of conflicts of law.